Masterclass 101: How to Calculate the Value of Enterprise Storage
You walk into a C-suite meeting one year from now and confidently declare, “The enterprise storage platform that we purchased to run our most essential applications and workloads has paid for itself in less than 9 months.” It’s a mic drop moment for IT. The CFO and other executives nod their heads approvingly.
This declaration of a business benefit, derived from a new enterprise storage system, is the beginning of understanding how to calculate its value to the business. It’s called “payback” and, in the storage world, payback is a bond that ties together business value and technical value.
Consider an enterprise storage buyer who is evaluating two different enterprise storage systems from two different vendors. One system has a payback of 3.4 years before it pays for itself, while the other system has a payback of under 9 months – yes, months, not years. Which one demonstrates better business value? The answer is clear. For payback, you calculate the amount of time it takes for cumulative savings to offset the amount of money you spent on the purchase of the system.
The flip side of the “value” coin in this case is to determine return on investment (ROI), calculating the percentage of return that a storage system is delivering over a period of time. It’s recommended to aim for an ROI of over 100% on your IT investment in a new enterprise storage system.
To calculate ROI, you divide net benefits by total costs, and multiply by 100. Net benefits include things such as lower operational expenses and reduced administrative overhead. To calculate net benefits, you take your total benefits and subtract total costs from it. Total costs involve not only hardware and software, but also data center operational costs (such as power, cooling, and floor space), IT labor and migration costs.
The Pillars of ROI
Total cost of ownership (TCO) is a pillar of ROI. It includes all expenditures across the expected lifespan of the enterprise storage system (anywhere from three to five years). TCO includes upfront hardware costs (storage systems) and/or a subscription model price (or software licensing), but it should also include costs that are not always obvious, such as migration expenses, training costs, and the need for 3rd party tools. It also needs to include the cost of power, cooling and data center rack space.
Today, enterprises can expand usable storage capacity at a significantly lower cost than previously possible years ago. You can lower TCO – and measure it with precision – by reducing the expenses of hardware, licensing and administrative overhead, all without compromising performance. This is made possible by high-density storage architecture and advanced data reduction capabilities.
Calculating the value of unplanned system downtime is also a key element of business value. Large enterprises typically pay between $300,000 and $1,000,000 per hour because of unplanned IT downtime, according to Dynamic Consulting Group. It’s even been reported that some Global Fortune 1000 enterprises pay as much as between $2,000,000 to $5,000,000 per hour for unplanned downtime.
Therefore, if an enterprise is down for 5 hours unexpectedly, for example, due to a disruption in the enterprise storage infrastructure, it will cost the enterprise anywhere between $1.5 million to $25 million for the day. Saving this money by having 100% availability of the enterprise storage platform contributes to the business value.
Today, enterprises typically operate at 365x24x7. Having 100% availability in enterprise storage means better supporting the business operations of the enterprise. High availability means faster load times, and this has cost and revenue implications.
When an enterprise storage system ensures 100 percent uptime, the business operations of an enterprise are better supported. No downtime translates into no operational business disruption. By adopting 100% uptime, you avoid gross revenue losses due to unplanned outages, and you factor it into your calculations of the value of your enterprise storage platform.
Another element of business value is improving the efficiency of enterprise storage management. You calculate this metric by measuring the speed of upgrade, the drop in support costs over a defined time period, and the total cost of deployment of a new cyber resilient enterprise storage solution.
The power efficiency of an enterprise storage system is also an increasingly important factor in calculating the business and technical value of a solution for the data infrastructure. You need to establish a baseline for power usage and then measure how much power is saved or can be re-directed to other systems within the data center (such as AI systems) by upgrading to a more power-efficient enterprise storage system. Calculating the use of energy by the storage systems gives you another dimension of revealing the broader value proposition of enterprise storage for modernizing data infrastructure.
Another worthwhile calculation is how fast data can be restored after a cyberattack, such as ransomware and malware. Rapid recovery translates into business value, minimizing any disruption to business operations and mitigating the damage and costs of cyberattacks. When your enterprise can restore a known clean copy of data within minutes, it’s arguable that the value to your business is “priceless” overall. But there are also hard numbers associated with it, such as 25% faster recovery of data translating into saving millions of dollars that otherwise would be lost.
Learning to calculate the value of enterprise storage changes the conversation about data infrastructure. It changes the way you conduct your own online research about the combination of business value and technical value of enterprise storage solutions. It also gives you stronger justification for refreshing or upgrading your data center’s storage infrastructure. The numbers for payback and ROI will back up your strategic IT planning.
